The Pax6 gene has a central role in development of the eye. We show, through targeted deletion in the mouse, that an ectoderm enhancer in the Pax6 gene is required for normal lens formation. Ectoderm enhancer-deficient embryos exhibit distinctive defects at every stage of lens development. These include a thinner lens placode, reduced placodal cell proliferation, and a small lens pit and lens vesicle. In addition, the lens vesicle fails to separate from the surface ectoderm and the maturing lens is smaller and shows a delay in fiber cell differentiation. Interestingly, deletion of the ectoderm enhancer does not eliminate Pax6 production in the lens placode but results in a diminished level that, in central sections, is apparent primarily on the nasal side. This argues that Pax6 expression in the lens placode is controlled by the ectoderm enhancer and at least one other transcriptional control element. It also suggests that Pax6 enhancers active in the lens placode drive expression in distinct subdomains, an assertion that is supported by the expression pattern of a lacZ reporter transgene driven by the ectoderm enhancer. Interestingly, deletion of the ectoderm enhancer causes loss of expression of Foxe3, a transcription factor gene mutated in the dysgenetic lens mouse. When combined, these data and previously published work allow us to assemble a more complete genetic pathway describing lens induction. This pathway features (1) a pre-placodal phase of Pax6 expression that is required for the activity of multiple, downstream Pax6 enhancers; (2) a later, placodal phase of Pax6 expression regulated by multiple enhancers; and (3) the Foxe3 gene in a downstream position. This pathway forms a basis for future analysis of lens induction mechanism.